Lending money to strangers?

Question

I got some extra money, I'm thinking about lending small sums for shert terms to individuals in need. How do I ensure that I get my money back? I guess the worst case scenario is that when i come to get my money back they pretend they don't know me.

Answer 1

No matter who you lend to there is no guarantee that you'll get it back. If you like the idea of lending small amounts of money to total strangers, try http://www.prosper.com/

Good luck.  

Answer 2

You can get the loan terms put in writing. If I may, please be careful about "loaning" money to people in need. Most people in need stay "in need" even after you loan them money and so repaying a loan is difficult, if not impossible for them. If you really want to loan money to strangers, put the repayment terms, i.e. how much, for how long, to be paid back in this way, on this date, etc., in writing and make sure you have them sign the contract with all of their contact information. Even then, please be aware strangers have a way of skipping town, moving, not answering or returning phone calls. Are you prepared to take them to court if they do not repay you? You are wise to question your intention to loan money to strangers. It is risky!

Answer 3

You would have to get a lien filed on the collateral such as their car or their house to ensure you get your money back.  You could do it like a pawn and accept jewelry but like a pawn shop, you would have to accept something that you can sell for the amount owed.  So if you loaned $1000 and they gave you some jewelry that they bought from an infomercial for $99, and they did not pay you, they would say they cannot pay you, you have the collateral and so now you are even.  They get to keep the $1000 and you have to try to sell the jewelry for $10 at a gold exchange or pawn shop.

Answer 4

You've got to be kidding. If they were a good risk they'd be getting a loan from their bank.

Even with everything in writing you have to go to court to collect if they don't pay. Then, even if you win, you still don't get paid. All you get is a court order telling them they have to pay you but they already know that so they ignore the court's ruling. You usually have to go to court again when they don't pay the court judgment to get their wages garnished. It's a long difficult process and, often you can't find the people to collect. It's a rare day when you actually collect what you loaned to them.

Answer 5

Easy.  Have them sign a contract and a release of information so you can pull their credit report in case they don't pay.

Answer 6

There is no such thing as "lending" money to strangers unless you have them sign a contract to repay.  If you want to give money to strangers look at it as a gift and don't expect it back.  You will be very disappointed.